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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Law Review Article on Punitive Damages and Class Actions Is An Interesting Read

Posted in Legal Publications and Articles

Francis E. McGovern, Punitive Damages and Class Actions, 70 La. L. Rev. 435.

While this scholarly law review article deals only tangentially with CAFA, our respect for Francis McGovern and the subject matter of his article drove us to give you a synopsis of it

In his article, Francis E. McGovern discussed class actions for punitive damages. The author first noted that punitive damages class actions have generally received a chilly reception, as only a limited number of factual scenarios exist where a class action for punitive damages could be successful. In this article, the author explored the possibilities, albeit only theoretically, of a union between punitive damages and class actions. 

The author noted that over the last 20 years of Supreme Court jurisprudence, there have been nine influential decisions that were devoted to punitive damages and two similarly influential cases related to class actions. The outcome of the law suits have been a critical examination of almost every aspect of punitive damages claim and judicial restrictions on the flexibility of juries and lower courts to sustain punitive damages awards. 

The author noted that, the defendants generally react quite negatively and independently to the use of class actions, particularly in personal injury cases, where large numbers of plaintiffs can be aggregated into one case for trial, however, the attitude of the defendants toward the use of class actions to settle cases was more nuanced.

The author remarked that the most productive approach for discerning any possibility for the certification of a class action for punitive damages was to disaggregate the Supreme Court jurisprudence and examine ach key variable of that jurisprudence separately to reach a possible scenario for a successful certification of a punitive damages class. The author lists (1) causes of action; (2) relationships between and among various elements of a putative class; (3) proper setting of goals, i.e. if a defendant moves for certification of a class to cabin all future punitive damages awards, there is always a greater chance for success than if plaintiffs made the same motion; (4) the scope of any punitive damages award–state or national; individual or group; party or non-party; (5) the nature of conduct; and (5) type of class action.

As CAFA enthusiasts, our interests, however, are focused on the type of class action. The types of class actions, both state and federal–for example, under the Fed. R. Civ. P. 23(b)(1), 23(b)(2), and 23(b)(3)–constitute an important factor in analyzing whether or not punitive damages are appropriate. The author noted post CAFA sensibilities could also have some effect of the attitudes of courts toward class actions.

The author goes on to explain how the shadow effect of punitive damages had persuaded many defendants to settle compensatory damages at a higher level in order to avoid the risk of large punitive damages being awarded at a jury trial. The author noted that from the perspective of society as a whole, if a defendant faces litigation from only ten to twenty percent of the plaintiffs who are tortiously harmed–a normal range of lawsuit filings–then that defendant will under invest in safety because it is not fully benefitting from the avoidance of liability resulting from an optimal investment in safety. As remarked by the author, ‘the marriage of punitive damages and class action has almost inevitably ended in divorce,’ however, there were few cases approved by appellate courts that have allowed a class action to include punitive damages, and under existing Supreme Court jurisprudence there were only a limited number of discrete factual situations where any future class action may include punitive damages.